Analyst Warns of Short Squeeze in GoPro (GPRO)
FBN Securities maintained an Outperform rating on GoPro (NASDAQ: GPRO) and raised its price target to $80.00 (from $75.00). The change follows strong Q1 results and guidance. Analyst Shebly Seyrafi noted high short interest in the stock, and he sees potential for a short squeeze today.
"GPRO is now starting to ramp in China (where it can compete well against Xiaomi), AMBA’s results did indeed bode well for GPRO (and now, conversely, we regard GPRO’s guidance as very strong for AMBA (Nasdaq: AMBA)) where there could now be $3-4M of revenue upside for AMBA’s Apr. quarter (vs. consensus of $66.5M), we see less pressure from the GPRO lockup expiration, and GMs were indeed above consensus and are expected to increase further in FQ2," said Seyrafi.
"Moreover, we would add to this list that GPRO’s short interest is quite high as short interest of 19.3M shares as of Apr. 15 increased from 14.8M on Dec. 31 and 11.2M on Nov. 14 (just six months prior) so we also believe that there could be a short squeeze today," continued the analyst.
Seyrafi added,"The company’s agreement to acquire of Kolor, a Savoie, France-based company specializing in virtual reality and spherical media solutions, will help the company offer more compelling solutions in the future."
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Shares of GoPro closed at $47.02 yesterday.